BEIJING - The Red Cross Society of China (RCSC) on Saturday announced the decision to shut down its subordinate organization in the commercial sector as investigation showed that the latter was run in a way that betrayed its non-profit mission by making money through manipulating philanthropy.

The investigation also showed that Guo Meimei, who claimed herself the "commercial general manager" of the Red Cross on her micro blog, had no connection with the charity organization or its branch in the commercial sector. Guo, 20, showed off her lavish lifestyle online and hit a public nerve in June, which plunged the Red Cross into a scandal for abusing the money given for "doing good".

The investigation was jointly conducted by five parties including the Ministry of Supervision, the RCSC and the China General Chamber of Commerce in July. The RCSC released both the investigation results and its statement on its official website following the investigation.

The Red Cross branch in the commercial sector had failed to establish a strict management structure, said the statement, as it had never held general assembly or elected its board of directors by vote as required since it was founded in 2001.

The Red Cross branch in the commercial sector proposed to the society to build 20,000 community-based stations nationwide to provide first-aid services to residents in 2006. Two years later, the project was designed and operated by a private company, and both its major shareholder and deputy general managers took important positions in the Red Cross branch in the commercial sector. The company was entitled to make profits from the charity project. However, the project failed before it was carried out nationwide, according to Chinese media.

The RCSC's statement said this kind of affiliate transaction seriously violated the principle of organizations "dedicated for public welfare" and blamed itself for unsuccessful supervision.

However, the notice stressed that neither the Red Cross nor its branch ever allocated funds raised from the public to invest in the project.

Apart from the efforts to disclose information online, the RCSC vowed to strengthen monitoring of its local branches and said it planned to invite ordinary people from all walks of life to participate in a supervision committee to keep a close eye on donations received and charity projects in the future.

Donation that the RCSC received in 2011 plummeted to 385.53 million yuan ($61.3 million), compared with 3.01 billion yuan in 2010, according to the statistics on its official website.

"The year 2011 was an unforgettable year for the Red Cross Society of China," said Zhao Baige, executive vice-president of the RCSC, on her new year's resolution to the public, pledging that the RCSC will work in a more transparent, professional way in 2012.

Wang Zhenyao, dean of One Foundation Philanthropy Research Institute at Beijing Normal University, believed that the Red Cross's decision to clamp down on a poorly managed branch was necessary but urged a reform on its management mechanism for sustainable development.

A resident surnamed Zou from Dalian city, in Northeast China's Liaoning province, said the RCSC should release a detailed financial report about its scandal-troubled projects which are related to the commercial sector.

She said such a report will help rebuild the image of the RCSC and encourage people to donate again.